Beaufort News

Proposed county purchase of the Beaufort Commerce Park stirs debate

The entrance to the Beaufort Commerce Park.
The entrance to the Beaufort Commerce Park. Jonathan Dyer/The Beaufort Gazette

Leaders of the Greater Beaufort-Hilton Head Economic Partnership made an assumption when they bought a 200-acre industrial park in 2006.

The northern Beaufort County land was "just grown-up pine trees," said Dean Moss, then the partnership's chairman. About 80 shareholders had owned it since the 1960s and sold only a few parcels.

Similar organizations in South Carolina had lured businesses with high-paying jobs using a combination of public and private money, the partnership reasoned. They also wanted to prevent a prime industrial property from becoming a housing development.

The group purchased the property, near Marine Corps Air Station Beaufort, with a $2.9 million, interest-only loan. Their plan: Prepare it for development, attract companies to buy parcels and gradually pay off the debt.

The assumption, Moss said, boiled down to this: "Other counties are having success. We can be successful."

Things haven't gone quite so smoothly.

Almost five years later, the partnership -- now known as the Lowcountry Economic Network -- has sold 30 acres. The network still owes $2.4 million, which came due Jan. 15. Lenders are unwilling to refinance on such friendly terms.

With a possible foreclosure looming, the network wants Beaufort County to buy the land, known as the Beaufort Commerce Park.

The proposal has stirred debate and incensed owners of competing sites. County Council has approved the purchase in two preliminary votes and will take a final vote Feb. 14.

THE PARTNERSHIP

The partnership was founded in 2001 by a group of civic and business leaders, said Moss, who remains a network board member.

Beaufort County had an economic development department of its own, but it was widely considered ineffective, Moss said. To replace the county department, the partnership was created as a public-private nonprofit organization. It received about $270,000 a year from the county.

Municipalities, schools, utilities and other businesses could join the group for $500 a year and buy a seat on the board for $15,000 a year.

The partnership drew scrutiny almost from its inception.

When its chairman asked the Beaufort City Council to join in 2001, then-councilman Billy Keyserling called it "a sham" and said municipalities should not have to pay to participate.

In 2003, reports surfaced that the partnership was paying then-executive director Rick Thrasher $145,000 a year -- more than the county's most recent administrator had made -- and did not follow the state's open meetings laws despite receiving more than $800,000 from the county over the previous three years.

Others, including County Council Chairman Weston Newton and former Hilton Head Island Mayor Tom Peeples, questioned what local governments received for their support.

The partnership landed its first business in 2005 -- Greenline Industries, which hired dozens of people to produce furniture and fixture veneers. The partnership hired its fourth leader, Kim Statler, in 2006 and changed its name in 2007.

Even without a surge of new businesses, network officials said, they have improved the park and begun to overcome a perception the region doesn't want industry. That notion began decades ago when residents successfully fought plans for industrial operations near the Colleton River.

THE PARK

The partnership bought the industrial park with a loan from five local banks.

"We thought it had validity at that time and wanted to try to help with the development of the county," said Jimmy Taylor, president for the Lowcountry of Regions Bank, one of the lenders. "We all were very comfortable with the deal when it was struck."

Officials at the other banks could not be reached or declined to comment.

As a few parcels sold, 80 percent of the revenue went to the banks, and 20 percent went to an escrow account to pay for park improvements.

Selling the land was difficult, Statler said, because many companies want sites with infrastructure and plans in place.

"If you don't have that baseline criteria, you're not even considered," Statler said. "It's not acceptable in this competitive environment to have a piece of dirt that's not quite ready."

Over several years the network has added water and sewer systems and created a master plan, development agreement and traffic management plan. A recently finished stormwater system is the last piece of the puzzle, Statler said.

"The results haven't come as quickly as anybody has wanted, because we've done it with very limited resources," Statler said.

Meanwhile, the economy soured. When the network sought to refinance its loan in 2009, lenders refused to offer interest-only terms again.

The network turned to Beaufort County in 2010. The county offered as much as $1.5 million, but the lenders rejected it.

THE CURRENT PLAN

County Council began wrangling anew over the park on Jan. 10, when it gave preliminary approval to making another offer for the property.

The county would offer full price, about $2.5 million. County Administrator Gary Kubic said his previous negotiation led him to believe the banks would refuse anything less.

Money for the purchase would come from an $11 million fund earmarked for repairing building defects in the Beaufort County Courthouse. Not all of the money is needed this year for repairs, said chief financial officer David Starkey. The fund for repairs would be replenished by borrowing money in the future.

The network argues the park represents an investment in the future. The arrival of the Joint Strike Fighter, a next generation fighter jet slated for the nearby air station, will put the park in a position to attract aeronautics firms.

"It takes investment to have progress," Statler said.

Two councilmen, Steve Baer and Brian Flewelling, have voted against purchasing the industrial park.

"Maybe the right way is for the banks to take the loss rather than the county taxpayers to take the loss," Baer said.

Others, despite their earlier votes to push forward, might not decide until the Feb. 14 meeting.

"I just want to wait and hear all the discussion before I make up my mind," said Councilman Stu Rodman.

UP FOR DEBATE

County Council members are grappling with a host of competing interests.

For one, a foreclosure on the park could cripple the network.

"I can't shield any of my accounts," Statler said. "You would basically be throwing away any progress that we've made in the last 10 years."

In addition, Statler said foreclosure would further tarnish the county's image as anti-industry.

"This county earned a reputation years ago that I still hear come out of Columbia -- that Beaufort County doesn't want business," she said.

A foreclosure would push the price of the park down, Baer said. Private investors probably could pick it up for less than $2.5 million, and the land would be added back to the tax rolls.

Kubic said it's worth considering whether a fire sale would affect other land prices. He said if he were an industrial landowner, "I would be arguing, 'Please do not let it go to foreclosure.' "

Councilman Jerry Stewart agrees, saying he worries about a "ripple effect" after a foreclosure hurting other properties.

Partners in another commerce park in Yemassee have another concern, They're worried about competing against a park owned by Beaufort County and have threatened to sue, saying the county's vast resources would put their park at a disadvantage.

Flewelling cited similar concerns when voting against the purchase on Jan. 24.

"I think that places us in the position of competing against private interests with public dollars," he said. "I have a little bit of a problem with that."

Statler said the network, which would continue to market the property for the county, wouldn't play favorites, steering companies toward the publicly owned park at the expense of privately owned parks.

Baer said a solid business plan for the park -- including alternative uses for the $2.5 million -- hasn't been done. He wants to wait for more information.

"It's, 'Let's buy it, and if we buy it, they will come,' " he said.

He'd like to have the park appraised again before the council votes to buy it. The last appraisal in 2009 valued the property at $3.75 million.

Kubic doesn't think a new appraisal would deviate significantly. The last appraisal was done before the new stormwater system was complete, Statler said.

WHAT WOULD CHANGE

If the county buys the park, three changes would help draw businesses, supporters say.

First, the county could sell lots at a loss in exchange for specific job-creation commitments, Statler said. The network couldn't do that because it needed cash to pay off its loan.

Not every deal would qualify for cut-rate property, Statler said, describing it as a balance: "The jobs and capital investment, are they worthy of the package that you put on the table?"

To qualify for any incentive, she said a business would have to commit to investing $2.5 million and creating 10 jobs that pay at least the state average for their industry.

In addition, a county purchase would qualify the park for economic development grants. Many utility companies, for instance, provide rural development grants that could be used to improve the park. Federal and state grants could sweeten the pot for a prospect considering the park.

Currently the park is ineligible for such grants because it isn't publicly owned.

Finally, purchasing the property might ultimately make the network accountable for its results.

Councilman Rick Caporale expects to see the network score "a major success" within a year if the county buys the park.

"Once we own it and the network has this disadvantage reduced, I think it's on them to produce," he said. "You can only talk for so long about what you're going to sell."

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